Pennsylvania Auditor General Bob Casey, Jr., deemed the $2.7 million contract between the state and Edison Schools, Inc., to be a "sweetheart deal," made without a thorough analysis, yesterday.
The July 2001 contract employed the for-profit educational management corporation to analyze the condition of the Philadelphia School District. Casey brought the nearly $3 million contract under investigation at the beginning of this year, and the report was published this week.
"The audit concluded what we had suspected all along -- that the contract between the Edison Schools and the state Department of Education was a 'sweetheart deal,'" said Karen Walsh, a spokeswoman for Casey.
Walsh said that the main concerns were twofold.
"The contract was made with no regard for the fact that [Edison] had never done an analysis before," she said.
"Edison is a management organization, no one is questioning that, but they had no qualifications to do this analysis," she added.
Walsh added that the $2.7 million fee was determined by Edison itself and was not questioned by the state. Instead, the state accepted the Edison bid without hearing any other corporation's bids.
Edison advised the state to privatize the city's ailing school system and eventually obtained a contract to manage some of the city's schools.
While Edison currently has a $60 million, 20-year contract with the city to run 20 of the district's 245 schools, that particular contract has not yet come under scrutiny.
Michael Masch, the University vice president for budget and management analysis and a member of the School Reform Commission, noted that the current contract is not under investigation, and the city was in no way responsible for the audited contract.
"What the auditor general was analyzing was a decision by the State Department of Education," Masch said. "It wasn't in any way a decision that anyone locally in the city of Philadelphia had made."
Although the contract with the city has not been investigated, Walsh added that "We are very interested in looking at" that one.
However, Walsh noted that the authority of the auditor-general is enacted only after payment. As Edison has not been paid any part of their salary, Casey cannot investigate the current contract until payment is received.
While Casey and his auditors did not discover specific wrongdoing in the audit, Walsh said that "what we're hoping this does is put a chill on future deals" like the Edison-Pennsylvania Department of Education contract.
If there are additional investigations, they are likely to be held under the government of the Governor-Elect Ed Rendell.
Tom Hickey, a spokesman for Rendell, said that while Rendell has not read the audit yet, he "is eager to read the results."
"He believes that education is a Pennsylvania priority, not just a Philadelphia problem. We need to change the funding of our schools," he added.
The City Council is trying to do just that. Along with a coalition of parents and teachers, City Council brought a lawsuit against the School Reform Commission and the state of Pennsylvania.
The group claims that the state takeover was unlawful and violated the Home Rule Charter, which assures local control of many areas of government, including the school system.
The Federal Court threw the case out of court, claiming that there were too many state issues involved to make a federal decision.
However, Edison protesters decided to file the suit with the Pennsylvania Supreme Court on Tuesday.
"Two of the state laws which authorized the state takeover added that any opposition of the takeover would be heard immediately in the State Supreme Court," said Tim Kearney, a spokesman for City Councilman David Cohen, one of the supporters of the suit.
The group is hoping to return the control of the city's schools back into the hands of the local government.
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